Claudia Feldkamp: [00:00:19] Hi and welcome. My name is Claudia Feldkamp. I am counsel at Fasken and I'm joined here today by my colleague Brian W. Burkett, also counsel at Fasken. Hi, Brian. [00:00:15]

Brian Burkett: [00:00:29] Hi, Claudia. How [00:00:25] are you doing?

Claudia Feldkamp: [00:00:30] I'm [00:00:30] doing well, thank you. So a brief word on Fasken before we get into the topic that we're [00:00:35] going to be discussing today. Fasken is a leading international law firm. We have more than two 950 [00:00:40] lawyers and ten offices on three continents. We focus on providing [00:00:45] results driven strategies to solve complex business and litigation challenges. [00:00:50] And one evolving and complex area impacting business today is in the area [00:00:55] of business and human rights. Both Brian and I advise clients in this area, and in this episode, we're [00:01:00] going to be discussing the roots of HR or business and human rights and also more recent [00:01:05] developments in this area. So perhaps, Brian, you could start us off with an introduction of BHR, what [00:01:10] it is, where it comes from, to give us a bit of a starting point for the conversation today.

Brian Burkett: [00:01:14] Happy [00:01:15] to do so Claudia. And welcome everybody. So BHR, [00:01:20] business and human rights, it's a relatively new field [00:01:25] that really focuses on the human rights footprint of [00:01:30] businesses, mainly multinational corporations which dominate the [00:01:35] global economy. So. The air footprint [00:01:40] of a corporation is all about the way in which it interacts [00:01:45] with its main people constituencies, and I think there are [00:01:50] five of them. You have shareholders. You have, [00:01:55] secondly, employees and workers in the supply [00:02:00] chain of that corporation. You have communities where [00:02:05] the corporation operates or maintains activities. You have [00:02:10] fourthly consumers. And fifthly, civil society. General. [00:02:15] So the way in which a corporation interacts [00:02:20] with these people groupings, that makes up its human [00:02:25] rights footprint. So let me just go a little further, Claudia, by [00:02:30] way of introduction. You know, in today's world. There's a [00:02:35] high level of attention from governments and citizens alike. Directed [00:02:40] at the human rights footprint of corporations. And I [00:02:45] think this often begs the question, why is this happening now? And [00:02:50] the answer is this. Economic globalisation [00:02:55] decades in the making, really, since after the Second World War [00:03:00] onward. Proceeded from inception without [00:03:05] proper attention to the social side. The people side, the human [00:03:10] side of, uh, the global economy. And [00:03:15] by the beginning of the 21st century.

Brian Burkett: [00:03:18] So two and a half decades ago, [00:03:20] not that long ago. It was openly acknowledged that there was [00:03:25] a social deficit embedded in economic globalisation. [00:03:30] A little bit further, the most high [00:03:35] profile aspects of the social deficit that I've just alluded to. [00:03:40] Dealt with forced labour. And child labour. [00:03:45] And I think there are statistics that justify that attention. [00:03:50] So these are 2022 statistics. And [00:03:55] they tell us that there's 160 million child labourers in [00:04:00] the global economy. Half of them, half of the 160 million, are [00:04:05] ages 5 to 11. And half of them are working [00:04:10] in hazardous jobs. Turning to forced labour. [00:04:15] There are 50 million forced labourers, half of which are [00:04:20] in forced marriages. So collectively the statistics tell us there's [00:04:25] over 200 million, well over 200 million forced and child labourers [00:04:30] toiling away in the global economy. And [00:04:35] Claudia, the social deficit that I've supported with these statistics, [00:04:40] it really got worse as a result of the socioeconomic [00:04:45] fallout from Covid 19. So the next time we get a [00:04:50] set of statistics relating to force and child labour, probably 2025, [00:04:55] the numbers are going to look even worse because they will include all [00:05:00] of the pandemic period, Claudia.

Claudia Feldkamp: [00:05:03] Thank [00:05:05] you, Brian, and thank you for giving that grounding for what has, uh, supported [00:05:10] and motivated action in this area, both in the international space [00:05:15] and then domestically and internationally. We've seen sort of a consensus. This is an [00:05:20] issue that states have a role to play in, uh, developing appropriate law and [00:05:25] policy and that businesses have a role to play, a critical role to play, uh, [00:05:30] recognising their impacts of business activities on human rights when it comes [00:05:35] to also, in particular, child labour and forced labour. So what has emerged [00:05:40] sort of domestically flowing from this international consensus and international guidance [00:05:45] and guidelines and principles in this area are a number of different ways in which [00:05:50] states can help ensure that businesses are appropriately managing [00:05:55] the adverse human rights impacts of their activities and what we've seen develop, [00:06:00] uh, sort of across the Canadian context, but also very much in other [00:06:05] jurisdictions, is effectively sort of a toolbox or a toolkit for governments [00:06:10] of various different ways of legislatively and policy wise, to develop [00:06:15] ways to be able to help ensure that businesses respect human rights in their business operations. [00:06:20] And I think what I'm going to do is I'm just going to, at a high level, identify some of these [00:06:25] types of initiatives. And then Brian would be helpful if we could kind of go, you know, sort of, um, drill down a [00:06:30] little bit on some of the individual ones, um, in the domestic context we [00:06:35] have and I'll just start in no particular order, but we have something called reporting legislation or [00:06:40] transparency legislation.

Claudia Feldkamp: [00:06:41] And this legislation is what we've seen recently come into Canada, [00:06:45] which requires businesses to effectively report on the things that they're [00:06:50] doing to prevent and to mitigate the risk of adverse human rights impacts, [00:06:55] in particular, the risk of the use of forced labour and child labour and supply chains. [00:07:00] And so this is a reporting legislation, it's transparency legislation that governments like the Canadian [00:07:05] government have passed to require for reporting in this area. We [00:07:10] also have seen and we do see. And there's a promise of this in the Canadian context. And again, we'll talk about this in a little bit [00:07:15] more detail, which is mandatory human rights due diligence legislation. And this legislation [00:07:20] is effectively mandating all the things that companies might need to report on and [00:07:25] reporting legislation mandating that they do those things. So mandatory human rights due diligence, [00:07:30] development of appropriate policies and procedures in order to to help prevent and [00:07:35] to mitigate the risk of, of human rights, adverse human rights impacts. We've [00:07:40] also seen in the Canadian context and as an example of how jurisdictions influence each [00:07:45] other in Canada. Now we have an import ban, and that import ban is effectively [00:07:50] comes out of the relationship that Canada has with the US and the Mexico and [00:07:55] trade agreement, and it's a ban on the importation of goods. So businesses are not are [00:08:00] prohibited from importing goods that have been manufactured in whole or in part using child labour or forced labour. [00:08:05]

Claudia Feldkamp: [00:08:05] So that's another tool, another avenue for for domestic governments to [00:08:10] impose obligations on businesses to help effectively, to prevent or mitigate [00:08:15] the risk of, of adverse human rights impacts. We also have national [00:08:20] action plans. So Canada doesn't actually have a national action plan when it comes to business and human [00:08:25] rights, but it is another tool that governments have taken to to be able [00:08:30] to effectively set out priorities and progress in the implementation [00:08:35] of business and human rights frameworks domestically, and developing appropriate laws and policies [00:08:40] for businesses and what they are required to do in this area in terms of managing [00:08:45] its business footprint when it comes to human rights. And then finally, I'll [00:08:50] just note another element in the Canadian context, which, you know, could we could see elsewhere [00:08:55] as well, which is the development of a non-judicial mechanism. So we have the Canadian [00:09:00] Ombudsperson for Business and Human Rights, which looks at allegations of adverse [00:09:05] human rights impacts of Canadian businesses operating globally. And it's a non-judicial [00:09:10] mechanism to provide remedy in, in this, this area. So that's sort of [00:09:15] the toolkit for domestic governments and what domestic governments have been doing in this area. And I think, Brian, [00:09:20] it would be helpful maybe to go a little bit more in detail what these pieces of types of legislation, [00:09:25] demand of businesses when it comes to compliance.

Brian Burkett: [00:09:28] Sure. Let's go there. [00:09:30] Uh, so and to kind of underscore what Claudia's been telling you, [00:09:35] governments also referred to as states, um, both [00:09:40] at the international and the domestic levels. What they're doing is they're searching [00:09:45] for effective solutions aimed at repairing the social deficit. And this [00:09:50] is what Claudio was referring you to. Well, because corporations, [00:09:55] multinational corporations essentially are so central to the global [00:10:00] economy. It will come as no surprise that governments or states, [00:10:05] as they're referred to, are shining a spotlight on corporations [00:10:10] and their human rights footprint. As governments focus [00:10:15] on corporations and their human rights impact. The [00:10:20] solutions are there really migrating from voluntary measures to mandatory [00:10:25] measures? So this journey, it's often referred to as [00:10:30] the shift from soft law, which are voluntary initiatives [00:10:35] such as corporate social responsibility to Hard law, which [00:10:40] is about mandatory regulation of corporate human rights [00:10:45] behaviour. So, Claudia, just a few quick examples as you've asked [00:10:50] to make the point. So and I'm concentrating on the international level [00:10:55] here. We're going to drill down on the Canadian shortly. But the international community [00:11:00] since 2014 has been attempting to construct a [00:11:05] UN treaty on business and human rights. And this treaty, [00:11:10] if it comes to pass, will impose mandatory regulation [00:11:15] on corporations in terms of their human rights [00:11:20] behaviour. The 10th International Session, a [00:11:25] gathering every year in Geneva, Switzerland, is going to occur in October 2024, [00:11:30] with the EU and the United States now [00:11:35] playing a more prominent role in this process for a UN treaty. [00:11:40]

Brian Burkett: [00:11:42] Perhaps even more significantly [00:11:45] in terms of these sort of developments is within individual countries. [00:11:50] And this is in the form of what's generally known as modern slavery legislation. [00:11:55] And to repeat what Claudia has told you, in some countries [00:12:00] you have reporting or transparency legislation [00:12:05] where the corporations simply has to report on its human [00:12:10] rights impact. Uh, countries like the UK, France, [00:12:15] um, Australia. They have reporting legislation. But [00:12:20] you also have a deeper type of legislation [00:12:25] also in the modern slavery arena. And that's mandatory [00:12:30] human rights due diligence. And this is where [00:12:35] the corporation doesn't. It has to do more than report. It [00:12:40] has to show how it's preventing human rights abuses and to the extent [00:12:45] it has caused human rights abuses, how they are repaired. So that's [00:12:50] the deeper set of legislation that Claudia referred to. Countries [00:12:55] like Germany, Norway and most recently the EU [00:13:00] 27 member states. Which passed its corporate sustainability [00:13:05] due diligence legislation. They have the mandatory [00:13:10] human rights due diligence type of legislation. So [00:13:15] that's kind of a recap of going a little deeper, Claudia, and [00:13:20] what you were talking about. Back to you.

Claudia Feldkamp: [00:13:24] Yeah. And [00:13:25] one of the things that, uh, in terms of the interaction of these pieces of legislation, you know, we two [00:13:30] of the ones that we've talked about are reporting and then the mandatory human rights due diligence. And [00:13:35] one of the things so in the Canadian context, the reporting legislation is quite recent. So the first [00:13:40] reports for for businesses that are have reporting obligations under the Canadian [00:13:45] reporting legislation, the um Forced Labour and Child Labour Act. [00:13:50] Those first reports are coming at end of May. But in terms of this interaction between [00:13:55] reporting and mandatory, Brian, you mentioned that mandatory human rights due diligence is [00:14:00] sort of a deeper form of legislation. And one of the critiques of this reporting legislation has been [00:14:05] that it doesn't quite go far enough. But one of the things that I have found is interesting is in terms [00:14:10] of a first step, is that reporting legislation does, I think, [00:14:15] focus the minds of a lot of organisations that previously may not, may have done [00:14:20] more or less in this area to start to recognise some of the elements of what goes into [00:14:25] an effective, uh, business and human rights of corporate policy in this area, because what [00:14:30] you're reporting on are effectively the elements that would be part of, [00:14:35] uh, of a human rights due diligence and, uh, procedure and [00:14:40] policies within an organisation. So for, for companies. And Brian, I'd like to hear your thoughts [00:14:45] on it. I, my, my, my sense is that reporting legislation at least experience we've had with companies [00:14:50] is that it is moving the the direction of where businesses are going, [00:14:55] even though it's short of mandatory human rights due diligence and effectively sets businesses up [00:15:00] to be possibly more capable of effectively meeting requirements [00:15:05] of mandatory human rights due diligence, which the Canadian government has promised to come [00:15:10] at some point. But maybe you can give us some more thoughts in terms of the interaction of these types of [00:15:15] of of legislation and what businesses should be thinking about particularly to date, they've [00:15:20] only had to deal with mandatory reporting or rather reporting legislation and not mandatory human rights legislation. [00:15:25]

Brian Burkett: [00:15:26] Sure. Uh, let me do that. And, um, I [00:15:30] think it may be best, Claudia, to actually talk about what is in the [00:15:35] legislation that's now in place in Canada, because that's what guides corporate [00:15:40] response, uh, for those corporations that are covered. And [00:15:45] you know, we like to refer this. It is a reporting statute. But [00:15:50] it's a heavy duty reporting statute. So let me just go through the highlights [00:15:55] of the Forced Labour and Child Labour and Supply [00:16:00] Chains Act that came into force in Canada January 1st [00:16:05] of this year, 2024. So the first annual reports. [00:16:10] Uh, for covered corporations. They they [00:16:15] must have been filed. By the end of May. [00:16:20] May 31st, 2024. Uh, secondly, [00:16:25] it's a very low threshold in the Canadian legislation for [00:16:30] which corporations are covered. Essentially, if a corporation has assets [00:16:35] of 20 million or revenue of 40 million, uh, [00:16:40] they're captured by the new legislation. Unlike to draw a contrast, [00:16:45] the new EU, uh, corporate sustainability due diligence directive [00:16:50] where the threshold uh, as the deal was struck about a month ago [00:16:55] among the 27 member states. It's tied to global [00:17:00] turnover of €450 million. So [00:17:05] a lot fewer corporations are captured by the European example [00:17:10] than the Canadian example. Thirdly. The [00:17:15] Canadian statute, which corporations are paying attention to as they [00:17:20] try and comply and complete their report. It deals with both forced [00:17:25] labour and child labour. Both those terms [00:17:30] are defined. There is no other piece of legislation in the world [00:17:35] that deals with both in this way. Fourthly, [00:17:40] as Claudia has mentioned, there is provision in the statute. [00:17:45] Or import bans. Now, not a lot has happened [00:17:50] in Canada on this front to date.

Brian Burkett: [00:17:54] But there is the capacity [00:17:55] to, uh, create import bans for [00:18:00] goods presumed to involve, uh, forced or child labour. [00:18:05] Until the EU passed its, uh, forced [00:18:10] labour regulation in March. There were only three countries in the world that had [00:18:15] an import ban, and they were all party to the North American Free Trade Agreement, Mexico, [00:18:20] the United States and Canada. So that's contained in the Canadian statute. [00:18:25] The import ban. Turning to the reports itself and [00:18:30] why we say it's basically a heavy duty reporting statute. The [00:18:35] Covered Corporation in the report has to disclose [00:18:40] its supply chain. Not an easy task because [00:18:45] the supply chains are quite complicated with many tiers. The [00:18:50] corporation has to disclose any due diligence processes that it [00:18:55] has. It has to disclose, and this is almost like a self-declaration, [00:19:00] but the corporation has to disclose the parts of its supply [00:19:05] chain. Where it is believed that there may be vulnerability [00:19:10] in terms of modern slavery occurring. The [00:19:15] corporation has to indicate the training it's done for employees in [00:19:20] this regard. Further, there are penalties and fines. [00:19:25] And finally, for the quick recap of the highlights. Um, [00:19:30] there's there's broad accessibility to these reports that are filed with government. [00:19:35] Available to shareholders and to the public at large. [00:19:40] So that's why we tend to refer this to this [00:19:45] as heavy duty reporting. So you can see [00:19:50] that the first cycle of reporting has just been completed. Uh, [00:19:55] under this new legislation. And here's [00:20:00] the observation that we have from the corporate community, which is [00:20:05] corporations have found this somewhat, uh, challenging. And [00:20:10] difficult to understand and to comply with.

Brian Burkett: [00:20:14] In [00:20:15] part, I think, because the legislation was not drafted by the government of the day. [00:20:20] But rather by a private member of the Senate in Canada. [00:20:25] And that's sort of an odd process for a bill [00:20:30] to become law. Government and in particular [00:20:35] the responsible ministry. Uh, the Ministry of Public Safety and Emergency [00:20:40] Preparedness. Um, it has provided some guidance materials [00:20:45] along the way. Uh. However, they have been [00:20:50] less than perfect. This may be why what government [00:20:55] has announced recently is that in the early, [00:21:00] uh, days, months, perhaps years of this legislation. They're [00:21:05] looking to awareness and education as [00:21:10] opposed to enforcement. As this all kind of takes shape [00:21:15] and becomes more commonplace, uh, to the corporate community [00:21:20] in Canada. Claudia, just one other point, and you've alluded [00:21:25] to it already, but there is more the federal government. Uh, [00:21:30] is on record repeatedly that it [00:21:35] intends to bring forward additional, deeper modern slavery [00:21:40] legislation in 2024. This would be [00:21:45] mandatory human rights due diligence legislation. There [00:21:50] has been one consultation period or interested stakeholders [00:21:55] with the federal government that occurred on October [00:22:00] 13th, 2023. Yeah. We assume [00:22:05] that the government is hard at work attempting to draft a bill, [00:22:10] and in doing so, to tie together a few points, there is no [00:22:15] doubt. Uh, because Canada often draws its inspiration from [00:22:20] Europe. Uh, there is no doubt that they'll be looking at examples like Germany, [00:22:25] Norway and the EU Corporate Sustainability due diligence [00:22:30] directive. So, Claudia, I think the final word is back [00:22:35] to you about where to for from here for Canada. Uh, given a somewhat [00:22:40] chaotic situation that we seem to be looking at.

Claudia Feldkamp: [00:22:45] I [00:22:45] think one of the things that you're, you're highlighting when you refer to also to the government [00:22:50] ministry that's responsible for this reporting legislation, is a government. The Canadian government [00:22:55] is no exception. Are grappling also with how to best manage [00:23:00] and to encourage and ensure you know that [00:23:05] business activity. Uh, the best of business activity and and managing [00:23:10] the adverse impacts of business activity. So all the the the number of stakeholders that [00:23:15] need to be actively and proactively engaged in ensuring that these variety of initiatives that we've [00:23:20] talked about fit together in a way that is effective is a challenge. It's [00:23:25] a real challenge, and it's a challenge in part because it's not just domestically. We're looking at it. We're [00:23:30] looking at other jurisdictions all grappling with similar issues, all finding slightly different [00:23:35] ways of managing them, although guided by similar principles. So I think one of the things [00:23:40] that, you know, one of the obvious points to make is it's very much a moving piece, and it's important [00:23:45] for all stakeholders and government and also business to be proactively [00:23:50] engaged in what is happening in the initiatives that are happening. Brian, [00:23:55] you referred to a consultation the government did on the mandatory human rights due diligence. [00:24:00] Uh, arguably there needs to be much more than that just to ensure that all, all [00:24:05] parties are engaged proactively in the developments that are going on. [00:24:10] Um, so I do think that one of the important elements is sort of proactive engagement, [00:24:15] not reactive.

Claudia Feldkamp: [00:24:17] I think there's some companies that, you know, were a little bit surprised when the reporting [00:24:20] legislation came in, notwithstanding that this is part of a larger piece. Um, so [00:24:25] being a monitoring what's happening, monitoring what's happening in other jurisdictions, but [00:24:30] also being actively engaged in developments domestically and internationally, I think is very [00:24:35] important also for for these initiatives. Brian, you use the word chaotic, you know, for these [00:24:40] initiatives to not be that for them to, to to be brought together in a way that is, you know, a little bit more [00:24:45] manageable but also effective, and then assessing how effective these [00:24:50] these initiatives are. As you say, Brian, the first reports are going to come in under this reporting [00:24:55] legislation. They're going to run the gamut in terms of what is reflected in them. You know, the the [00:25:00] length of them, the what actions have been taken, the industries and how different they are between industries. [00:25:05] So we are still in a bit of a learning, uh, phase. Uh, certainly [00:25:10] government continues to be in a learning phase. So I think focusing on ensuring to be on [00:25:15] top of what's happening, but also being engaged, uh, regardless of what stakeholder you are, [00:25:20] is important here. Brian, I know you left it to me to do the last word, but if you have another word [00:25:25] to add, um, please, please go ahead.

Brian Burkett: [00:25:28] Uh, nothing to add, Claudia. I thought that was a [00:25:30] great way of summarising where Canada needs to go, the sort of steps it [00:25:35] has to do, uh, to get to a point where where we are effectively [00:25:40] dealing, uh, from a Canadian perspective with the social deficit [00:25:45] that we are actively trying to repair within economic globalisation. [00:25:50] Thanks, Claudia.

Claudia Feldkamp: [00:25:52] Thank you. Brian. This has definitely been [00:25:55] a very informative discussion, and there's a lot for our listeners to think about. There continues to be a lot [00:26:00] for us to think about. To learn more about this subject, I invite you to consult the website at Fasken. Com [00:26:05] and if you have any specific questions, obviously we're always very happy to respond. [00:26:10] So thank you again for listening.